In Rick Perry’s Texas: Medicaid Is Wasting Millions — On Braces

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Republican presidential frontrunner Rick Perry complains constantly about Washington’s “culture of runaway spending,” wasteful government programs, and federal intrusions into the affairs of the states. In Fed Up, the book he published last year, the Texas governor bitterly criticizes Medicare (which he terms “unconstitutional”) as well as the health care reforms passed by President Obama and by Mitt Romney in Massachusetts, which he regards as infringements on freedom.

Before Perry goes after Romney and Obama on medical spending, however, perhaps he ought to try putting his own state’s government in order first. According to a new investigation by a Dallas television station, the Medicaid program in Texas – overseen by Perry – is wasting millions of dollars annually on orthodontic braces for children who may not even need them.

But the story gets worse: Texas Medicaid is wasting big money on unnecessary braces due to lax regulation by the state –and those millions are going straight to for-profit clinics owned by hedge funds.

Reviewing Dallas ABC affiliate WFAA’s investigation, health care expert Trudy Lieberman explains in the Columbia Journalism Review how the teeth of poor children in Texas became a golden opportunity for wealthy investors on Wall Street. Last year, the state spent more than $184 million to provide braces for 120,000 children – many of whom apparently did not qualify for orthodontic care under the state’s own criteria, according to WFAA investigative reporter Byron Harris. That is more than twice as much as Texas spent on the same program three years ago –and the same amount as all of the other 49 states combined.

“Judging by the increased payouts,” Harris noted, “the teeth of Texas children are growing more crooked each year.”

Or are they? Harris found that the process for evaluating whether children should receive orthodonture is so loosely regulated – by an outside contractor – that claims are almost never rejected even when they blatantly violated the state’s rules. “Any way you fill out that sheet will be approved,” one orthodontist told Harris. “Providers use that [evaluation] as an excuse to lie on that sheet because there’s no checks on that sheet.”

Medicaid usually doesn’t buy braces for children under 12 years old, for instance, because their permanent teeth haven’t come in yet. But 19,000 kids under 12 in Texas got Medicaid braces, or nearly a quarter of the total number. As Lieberman wondered, “Who’s minding the public purse down there? It appears that the state may not be looking too closely at what it is paying for, or perhaps it is looking the other way.”

WFAA’s Harris found that the millions spent (or misspent) by Texas Medicaid on braces is going to clinics – some of which were sold by local dentists to investment bankers. And that means “Wall Street [is] the ultimate destination for millions of taxpayer dollars,” as he reported, citing a chain of 51 orthodonture clinics that raked in $10 million last year and was recently bought by a hedge fund.

Fortunately for taxpayers, Perry’s vision of state governments unfettered by federal oversight or control, as outlined in “Fed Up,” has yet to become reality. Thanks to WFAA’s reporting, the inspector general of the Department of Health and Human Services has opened an official investigation of questionable Medicaid spending on braces in Texas. If that audit finds substantial flaws in the performance of ACS Texas Medicaid Health Partners – the private firm contracted to monitor Medicaid dental claims – then the state may sue to recover at least some of the misspent funds.